In Richmond Hill (Town) v. Elginbay Corporation, 2016 ONSC 5560, the Town of Richmond Hill (the “Town”) appealed to the Divisional Court, with leave, from a decision of the Ontario Municipal Board (the “Board”) which had approved the Town’s proposed parkland conveyance policies, subject to an important modification, described below, to which the Town objected.

Statutory background

Pursuant to subsection 42(1) of the Planning Act, a municipality may require conveyance of parkland as a condition of the development of land. The amount of land to be conveyed, in the case of land proposed for development or redevelopment for commercial or industrial purposes, may not exceed 2 per cent of the land to be developed, and in all other cases may not exceed 5 per cent of the land. Subsection 42(3) contains an “alternative requirement” whereby a municipality may require, in the case of residential development, as an alternative to the parkland dedication provided for in subsection (1), dedication at a rate of up to one hectare for each 300 dwelling units proposed (the rate to be established by by-law, which is not appealable to the Board). Subsection 42(6) provides that a municipality may require that all or part of a parkland dedication obligation be satisfied by the payment of cash equivalent to the value of the land to be conveyed, which is known as “cash-in-lieu.” Where a municipality wishes to avail itself of the opportunity to require dedication using the alternative rate, it must have specific policies, dealing with parkland dedication and the use of the alternative requirement, in its Official Plan.

Underlying policy considerations

These sections of the Planning Act give rise to an important policy debate. Generally speaking, the use of the alternative parkland dedication rate for residential development is of concern to high-density residential developers. The greater the number of units proposed to be developed on a given parcel of land, the more parkland dedication or cash-in-lieu will be required. For relatively small parcels of land, where onsite parkland dedication is not feasible, cash-in-lieu obligations can cost developers significant amounts of money. Municipalities, on the other hand, generally wish to ensure that sufficient parks and recreational opportunities are available to their residents. For residents of high-density buildings in particular, where onsite amenity space is limited, public opportunities for outdoor space and recreational programming are desirable, and the municipality requires land and funding to deliver these spaces and programs.

At issue: the authority of the Ontario Municipal Board to impose a cap on alternative parkland dedication

In July 2010, the Town adopted a new Official Plan, which contained policies regarding the use of the alternative rate for parkland dedication. Those policies of the new Official Plan were appealed to the Board. At the end of a lengthy hearing, the Board made the decision to require the Town to implement a policy that imposed an overall cap on its parkland dedication requirements equivalent to 25% of the area of any site to be developed, or its cash-in-lieu equivalent. The imposition of the 25% cap on the parkland dedication requirement gave rise to the appeal to the Divisional Court.

The Divisional Court held that the plain wording of section 42 leaves the decision as to the rate to be applied in each instance to the municipality to decide by by-law. On this basis, the Court found two flaws in the Board’s reasoning: (1) that the Board had the jurisdiction to “fix” a particular alternative parkland dedication rate; and (2) that the Board could take it upon itself to fix:

“individual rates in individual municipalities through the guise of its authority to review an official plan. The OMB purports to assume this authority notwithstanding that the two subsections plainly assign that task to municipalities to be undertaken by way of individual by-laws.”

The Court went on to find that:

“the interpretation of s. 42(4), implicitly adopted by the OMB, is unreasonable on the face of the plain wording of s. 42…. It effectively abrogates the role that the Legislature clearly intended municipalities would perform and instead bestows that role onto itself. And in doing so, the OMB finds authority to establish a maximum rate for the alternative requirement that is different from the maximum provided by the Legislature in the statute.”

The Court remitted the matter back to the Board for further determination in accordance with the Court’s reasons.